Key benchmark indices dropped for the second straight day as world stocks fell after stronger-than-expected as US economic data raised fears that the Fed will reduce the flow of monetary stimulus to the economy if the economy continues to improve in line with its projections. Index heavyweight and cigarette major ITC witnessed a post-result slide as the company's revenue growth in Q1 June 2013 fell short of market expectations. The S&P BSE Sensex hit its lowest level in more than a week below the psychological 20,000 mark. The 50-unit CNX Nifty hit two-week low. The Sensex was provisionally down 286.26 points or 1.42%, off close to 305 points from the day's high and up about 40 points from the day's low. The market breadth, indicating the overall health of the market, was weak. GAIL (India) fell on weak Q1 result. Maruti Suzuki (India) declined fell in choppy trade after strong Q1 results.
Two-wheeler major Hero MotoCorp held firm in weak market as the company managed to sustain its margins at the operating level in Q1 June 2013 despite the sluggishness of the auto industry. Capital goods pivotals L&T and Bhel hit 52-week low. IT major Wipro dropped ahead of its Q1 result tomorrow, 26 July 2013. FMCG major Hindustan Unilever also declined ahead of its Q1 result tomorrow, 26 July 2013. Ambuja Cements tumbled and ACC dropped after Swiss parent Holcim announced a major restructuring of its India operations on Wednesday, 24 July 2013. Weak Q2 results also weighed on the two cement counters.
The market was volatile as traders rolled over positions in the futures & options (F&) segment from the July 2013 series to August 2013 series. The July 2013 derivatives contracts expired today, 25 July 2013.
The market sentiment was hit adversely after provisional data showed that foreign funds were net sellers of Indian stocks on Wednesday, 24 July 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 404.50 crore on Wednesday, 24 July 2013, as per provisional data from the stock exchanges.
As per provisional figures, the S&P BSE Sensex was down 286.26 points or 1.42% to 19,804.42. The index fell 326.78 points at the day's low of 19,763.90 in late trade, its lowest level since 16 July 2013. The index rose 20.13 points at the day's high of 20,110.81 in early trade.
The CNX Nifty was down 85.15 points or 1.42% to 5,905.35, as per provisional figures. The index hit a low of 5,896.40 in intraday trade, its lowest level since 11 July 2013. The index hit a high of 5,990.65 in intraday trade.
The total turnover on BSE amounted to Rs 2140 crore, higher than Rs 1862.12 crore on Wednesday, 24 July 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,414 shares fell and 854 shares rose. A total of 175 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks fell and rest of them rose. Tata Power Company (down 3.14%), Tata Steel (down 3.13%) and Jindal Steel & Power (down 2.82%), edged lower.
GAIL (India) fell 1.1% on weak Q1 result. The company's net profit declined 28.17% to Rs 808.17 crore on 16.01% growth in total income to Rs 12957.48 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced during market hours today, 25 July 2013.
Maruti Suzuki (India) declined in choppy trade after the company reported strong Q1 results. The stock dropped 0.25%. The scrip hit high of Rs 1,452 and low of Rs 1,402.30. The company's net profit jumped 49% to Rs 631.60 crore on 5.1% decline in net sales (net of excise) to Rs 9995.10 crore in Q1 June 2013 over Q1 June 2012. The company announced the first quarter results during trading hours today, 25 July 2013. The company said the increase in net profit was due to focused cost reduction efforts undertaken by the company, favourable foreign exchange rate and the benefit from the merger of Suzuki Powertrain India with the company during the year ended March 2013 (FY 2013). The fall in unit sales was in line with the overall industry, and the company was able to maintain its market share during the quarter, Maruti said. Favourable foreign exchange rates during the quarter helped improve export realization and limit the impact on net sales, Maruti said.
Shares of power equipment major Bharat Heavy Electricals declined 2.79% to Rs 158.45, with the stock extending intraday losses. The stock hit a 52-week low of Rs 157.15 in intraday trade today, 25 July 2013.
L&T fell 1.6% to Rs 853.20. The stock hit 52-week low of Rs 850.10 in intraday trade today, 25 July 2013. L&T's net profit declined 12.46% to Rs 756.03 crore on 3.69% growth in total income to Rs 13027.66 crore in Q1 June 2013 over Q1 June 2012. L&T attributed the decline in net profit to unfavorable job mix, lower margin accruals and lower other income. The Q1 result was announced on 22 July 2013.
Two-wheeler major Hero MotoCorp surged as the company managed to sustain its margins at the operating level in Q1 June 2013 despite the sluggishness of the auto industry. The stock jumped 4.39%. The company after trading hours on Wednesday, 24 July 2013, reported 10.86% decline in net profit to Rs 548.58 crore on 1.25% decline in total income to Rs 6271.78 crore in Q1 June 2013 over Q1 June 2012. The company said the net profit declined due to higher tax rate on account of the expiry of 5 years (April 2008-March 2013) of 100% exemption in Haridwar, where the largest-producing manufacturing plant of the company is located. With the expiry of the tax benefit, the tax liability of the company went up to 26.9% in Q1 June 2013, from 16.3% from Q1 June 2012. The decline in net profit is also reflective of the newly-levied higher surcharge in the Finance Bill 2013, Hero MotoCorp said in statement.
The operating profit margin (OPM) fell by a marginal 10 basis points on year on year basis to 14.9% in Q1 June 2013.
Commenting the first quarter results, Mr. Pawan Munjal, MD and CEO, Hero MotoCorp said: "The fact that our profit before tax has surpassed the previous as well as the corresponding quarter, despite a marginal de-growth in our volumes during the quarter and the overall economic downturn, is a strong statement of our intent and vision. Our operating profit has also improved compared to the previous and the corresponding quarter. We are determined to sustain the trajectory of positive momentum in the coming quarters as well. Q1 of this fiscal was an action-packed quarter for us when we rolled out a slew of innovative initiatives including the 'industry-first' five-year warranty on our entire range of products and our own dedicated retail financing arm. We continued to grow ahead of the industry in both scooters and 125cc motorcycles this quarter, thereby building further on our market share gain in these segments. We had a record month in May, with our highest ever dispatches in a month. Retails also kept pace with record 1.1 million-plus retail sales in April-May -- the highest-ever retails in a non-festival period. Heavy and early rains in June have slowed down the momentum a bit, but we are optimistic about growth in the second half of the fiscal. Our product launches that are planned around the festive season should contribute towards accelerating growth. On the new market front, after entering Central America and Africa, we are now geared-up for Latin American markets of Peru and Ecuador which should be in the month of August".
Ambuja Cements tumbled and ACC dropped after Swiss parent Holcim announced a major restructuring of its India operations on Wednesday, 24 July 2013. Weak Q2 results also weighed on the two cement counters. Ambuja Cements lost 10.36% to Rs 171.30 and ACC shed 3.6% to Rs 1,186.15.
Swiss cement major Holcim on Wednesday, 24 July 2013, announced a major restructuring of its India operations -- currently, Holcim owns a little over 50% stake in its two cement subsidiaries in India viz. ACC and Ambuja Cements. The board of directors of Ambuja Cements on Wednesday, 24 July 2013, approved a proposal, wherein Ambuja will first acquire from Holderind Investments, Mauritius (Holcim), a 24% stake in Holcim India for a cash consideration of Rs 3500 crore, followed by a merger of Holcim India into Ambuja. The intra-group transaction will result in Ambuja holding 50.01% stake in ACC. The merger swap ratio proposed by two independent accounting firms and approved by Ambuja's board, is one Ambuja share for 7.4 Holcim India shares, translating into an implied swap ratio of 6.6 Ambuja shares for every ACC share, Ambuja said in a statement. Based on the approved merger ratio, Ambuja will issue 58.4 crore new equity shares of the company to Holcim, as consideration for the merger. Post the merger, the expanded capital base of Ambuja (post cancellation of the shares held by Holcim India in Ambuja and the issuance of new shares as aforesaid) will increase by 28%. Holcim will then own 61.39% of Ambuja and Ambuja in turn own 50.01% of ACC.
In addition, Ambuja's board also provided its approval for Ambuja to make commercially reasonable efforts to invest up to Rs 3000 crore to acquire an economic ownership in ACC of up to 10% without triggering a mandatory open offer.
Ambuja said that this restructuring exercise is expected to be EPS accretive from year one post completion of the transaction. There is synergy potential of about Rs 900 crore through supply chain and fixed cost optimization expected to be realised in a phased manner over two years post completion of the transaction.
ACC's consolidated net profit declined 36.85% to Rs 261.76 crore on 3.57% decline in sales turnover to Rs 2795.23 crore in Q2 June 2013 over Q2 June 2012. The result was announced during trading hours today, 25 July 2013. Demand for cement during the second quarter of the year was lower than seasonal expectations which resulted in weak market conditions, leading to a decline in operating EBITDA and net profit, ACC said. The company is implementing a number of initiatives to further improve its operational efficiencies and to optimize distribution and logistics to counter adverse market conditions.
Ambuja Cements' net profit fell 30.9% to Rs 324 crore on 8.6% decline in net sales to Rs 2346 crore in Q2 June 2013 over Q2 June 2012. The company announced Q2 result after market hours on Wednesday, 24 July 2013.
The cement industry is going through subdued demand on account of overall economic slowdown, Ambuja Cements said. Early onset of monsoon has put further pressure on demand, the company said. With regard to future business outlook, Ambuja Cements said that despite difficult macroeconomic conditions, the company is committed to its thrust in improving operational efficiency and productivity. The company believes that these initiatives will go a long way in preserving and even growing operating margins, it said.
Ambuja Cements also said that the board of directors of the company at its meeting held on 24 July 2013 approved setting up of a 2.17 million tonnes per annum (MTPA) greenfield clinkerization project at Marwar Mundwa, District Nagaur, Rajasthan and three clinker grinding units of 1.5 MTPA capacity each at Marwar Mundwa, Rajasthan, Dadri (phase II), Uttar Pradesh and Osara, Madhya Pradesh at an approximate cost of Rs 3500 crore.
Index heavyweight and cigarette major ITC witnessed a post-result slide as the company's revenue growth in Q1 June 2013 fell short of market expectations. The stock dropped 4.44% to Rs 359.30. On BSE, 37.85 lakh shares changed hands on the counter, compared with average daily volume of 5.41 lakh shares in the past one quarter. Shares of ITC had witnessed a pre-result rally. The stock had jumped 15.71% to settle at Rs 376 on Wednesday, 24 July 2013, from a low of Rs 324.95 on 2 July 2013.
ITC's net profit rose 18.05% to Rs 1891.33 crore on 10.5% increase in income from operations to Rs 7410.70 crore in Q1 June 2013 over Q1 June 2012. The result was announced during trading hours today, 25 July 2013.
IT major Wipro declined 4.44% ahead of its Q1 result tomorrow, 26 July 2013.
FMCG major Hindustan Unilever shed 3.63%, with the stock extending intraday losses ahead of its Q1 result tomorrow, 26 July 2013.
Zee Entertainment Enterprises jumped 6.43% to Rs 259.90 after consolidated net profit surged 42.04% to Rs 224.64 crore on 19.73% growth in total income to Rs 1045.42 crore in Q1 June 2013 over Q1 June 2012. The stock hit 52-week high of Rs 262.35 in intraday trade today, 25 July 2013. The Q1 result was announced during trading hours today, 25 July 2013.
European indices edged lower on Thursday, 25 July 2013, on weak earnings from BASF SE, Orange SA and Michelin & Cie. and investors weighed prospects for Federal Reserve stimulus. Key benchmark indices in UK, France and Germany were down by 1.02% to 1.31%.
German business confidence rose for a third month in July, indicating that Europe's largest economy is recovering as the 17-nation euro region tries to shake off its longest-ever recession. The Ifo institute's business climate index, based on a survey of 7,000 executives, rose to 106.2 from 105.9 in June.
UK economic growth accelerated in the second quarter as all main industries showed expansion for the first time in three years, indicating Britain's recovery is gaining traction. Gross domestic product increased 0.6% from the first quarter, when it rose 0.3%, the Office for National Statistics said in London today.
Asian stocks fell on Thursday, 25 July 2013, as investors weighed US economic data to gauge the fate of Federal Reserve stimulus. Key benchmark indices in Indonesia, China, South Korea, Hong Kong, Singapore, Japan, and Taiwan were down by 0.13% to 1.14%.
China on Wednesday, 24 July 2013, announced some new, minor stimulus measures. China's cabinet on Wednesday, 24 July 2013, said it would cut taxes for small businesses and seek to aid some exporters, while also increasing state investment in railways.
Trading in US index futures indicated that the Dow could fall 99 points at the opening bell on Thursday, 25 July 2013. US stocks closed largely lower on Wednesday after improving home sales in the US renewed expectations that the Federal Reserve remains on course to winding down stimulus measures this year.
A report yesterday showed that new home sales rose more than forecast in June to a five-year high, and a manufacturing gauge rose. Fed Chairman Ben S. Bernanke has said asset purchases that have stoked bond and equity gains may be trimmed this year should economic risks subside. US new-home sales climbed 8.3% to an annualized pace of 497,000, the highest level since May 2008, according to Commerce Department data. The Markit Economics preliminary index of US manufacturing increased to 53.2 in July from a final reading of 51.9 a month earlier, the London-based group said.
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